The Industrial Relations Code 2020 Explained (2026)

Explainer · Labour Law · India

Updated for 2026 · Claw Editorial

The Industrial Relations Code, 2020 sets the rules for how workers, unions and employers deal with each other: who the union speaks for, what the standing orders say, when an employer needs government permission to retrench or close, and how strikes and disputes are handled. It replaces three old laws and raises several key thresholds. The four labour codes, including this one, were brought into force on 21 November 2025, with provisions and state rules rolling out in stages. This explainer covers what the Code changes and the practical rules that matter most. Last verified October 2026.

01Why a new industrial relations law

The old framework spread industrial relations across three separate Acts, written over different decades, with their own definitions and procedures. Employers found the rules on restructuring rigid, and workers found union recognition and dispute resolution slow. The Industrial Relations Code, 2020 pulls these three laws together and tries to balance easier restructuring for employers with clearer recognition and benefits for workers.

It is the labour code that most affects factories, mines and larger establishments, because it controls hiring flexibility, union power and the right to strike.

02What the Code replaces

The Code consolidates and replaces three central laws:

• the Trade Unions Act, 1926;
• the Industrial Employment (Standing Orders) Act, 1946; and
• the Industrial Disputes Act, 1947.

So union registration, the written terms of employment in an establishment, and the machinery for resolving disputes now all sit in one statute.

03Trade unions and the negotiating union

The Code keeps trade union registration and adds a clear rule for who negotiates with the employer. Where there is only one union, it is the sole negotiating union. Where there are several, the union with the support of at least 51 percent of the workers on the rolls is recognised as the sole negotiating union.

If no single union reaches 51 percent, a negotiating council is formed, with one representative for every 20 percent of the workers a union represents. This gives employers a single, clear body to bargain with.

04Standing orders at 300 workers

Standing orders are the written rules of employment, covering matters like classification of workers, hours, leave, and conduct. Under the Code, the standing orders provisions apply to an industrial establishment that had 300 or more workers on any day in the preceding twelve months. The earlier threshold was 100 workers.

Raising the standing orders threshold from 100 to 300 workers is one of the Code's biggest practical changes for mid-sized employers.

Establishments at or above the threshold must adopt standing orders, using the central model standing orders as a base, and have them certified.

05Retrenchment, lay-off and closure

The Code raises the threshold at which an industrial establishment that is a factory, mine or plantation must take prior government permission to lay off, retrench or close. That threshold is now 300 workers, up from 100. Below 300, such establishments can restructure without prior permission, subject to notice and compensation rules. Some states had already moved to 300 by their own amendments, and the Code preserves those.

The Code also creates a worker re-skilling fund. On retrenchment, the employer contributes an amount equal to 15 days of wages (or as notified) for each retrenched worker, and the worker is paid 15 days of wages from the fund within 45 days.

06Strikes, lock-outs and disputes

The Code extends the notice rule for strikes and lock-outs to all industrial establishments. Earlier, advance notice was required mainly in public utility services. Now no worker may go on strike, and no employer may lock out, without giving 60 days of notice, and not during conciliation proceedings and for seven days after, nor during tribunal or arbitration proceedings and for sixty days after.

Disputes are handled by conciliation officers and by Industrial Tribunals, with a National Industrial Tribunal for larger matters. Establishments with 20 or more workers must set up a grievance redressal committee. The idea is to settle most disputes faster and closer to the workplace.

07Where Claw fits

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

An industrial dispute can travel a long way, from conciliation to an Industrial Tribunal and on to the High Court and the Supreme Court, and much of the early contest under this Code will turn on how judges read the raised thresholds, the negotiating union rule and the new strike notice. Claw lets you watch that body of decisions take shape. You can search more than 30 crore judgments, from the Supreme Court since 1950 and the High Courts since 1990, to see how the old Trade Unions, Standing Orders and Industrial Disputes Acts were read and how the new Code is now being applied, with a search that returns in under five seconds. You can also keep your own matter in view by party or advocate name, across the 9,102 courts, benches and forums Claw follows.

Claw does not use customer case documents to train its AI models, so your filings stay your own. Open a free Claw account to track an industrial dispute and research the case law behind it. For the wider picture, see the four new labour codes, or run case search across Indian courts.

08Sources and further reading

• Ministry of Labour and Employment: labour.gov.in
• PRS Legislative Research (Industrial Relations Code, 2020): prsindia.org
• India Code (official statute text): indiacode.nic.in
• Claw: clawlaw.in

This explainer is general information, not legal advice. The codes are being rolled out in stages and rules differ by state, so check the current notifications and take advice from counsel before you act.

09Frequently asked questions